Biden-backed infrastructure bill would repeal oil drilling in Alaska’s Arctic refuge
The provision — one sentence in a 1,684-page bill — would end the program and refund leaseholders.
The $1.75 trillion “Build Back Better” infrastructure bill promoted by President Biden would revoke the program that opened the Arctic National Wildlife Refuge to oil development and refund the money that bidders spent in a lightly attended lease sale held by the Trump administration.
The ANWR provision in the bill now pending in the U.S. House is only a single sentence on page 851 of the 1,684-page bill that passed through the body’s rules committee. It states that the oil and gas program and the leases issued through it are repealed and that refunds to bidders will be issued within 30 days of the bill’s enactment.
To advocates on both sides of the issue, however, the inclusion of that brief passage is a big step.
“Mashi’ choo to President Biden and members of Congress who continue to seek protection for sacred lands essential to the Porcupine caribou herd and our Gwich’in way of life,” Bernadette Demientieff, executive director of the Gwich’in Steering Committee, said in a statement. “Our identity, spirituality, and culture is interconnected to the land, water and animals. Indigenous groups and allies around the country and world join us in fighting for the health of these lands, our communities, and the future of the planet. We never give up hope and look to the Build Back Better Act to repeal the destructive and irresponsible Arctic Refuge leasing program, and take an important step toward enduring protections.”
The Gwich’in Steering Committee is an umbrella organization for Gwich’in tribal groups in Alaska and Canada that have long opposed Arctic Refuge oil development because of potential disruption to the caribou herd, one of the largest in North America, and to the region’s other ecological values.
Senator Lisa Murkowski, however, vowed that she and her pro-development colleagues in the all-republican Alaska delegation — Senator Dan Sullivan and Representative Don Young — will fight to preserve the ANWR oil program.
“The ANWR opponents will try anything to reverse the law we passed in 2017 to open a small fraction of the non-wilderness 1002 Area to responsible development. Not even high energy prices, mounting inflation, and declining economic growth have convinced them to support the domestic production of resources we will rely on long into the future,” she said in a statement.
“The contrast could not be more clear: while I added this provision to the Tax Cuts and Jobs Act, House Democrats are intent on passing a bill to raise taxes and destroy jobs in Alaska. They have also structured this as an illegal taking that would fundamentally alter how U.S. oil and gas leases have been issued and administered for decades. While Dan, Don, and I will do everything we can to strike it from the reconciliation bill, AIDEA and the State of Alaska should be ready to file suit for damages from the federal government if it remains part of this deliberately partisan measure.”
The 2017 tax legislation that opened the refuge to oil development, as a budget reconciliation bill, needed only a majority vote in the Senate and was immune from filibuster.
Similarly, the Build Back Better legislation is a budget reconciliation bill. Opponents of refuge oil development are optimistic that the provision canceling the program will remain intact, said Corey Himrod of the Alaska Wilderness League.
“As far as the reconciliation bill itself, assuming Democrats come to agreement at some point on a final topline spending number, it should have the votes in the House and the 50 needed in the Senate to pass. As for the provision itself, it’s made it through committee in the House and we’re confident it will remain in through to the final bill,” he said by email.
The 2017 legislation that launched the ANWR oil program projected that two mandated lease sales would yield a bonanza for the U.S. treasury. The Congressional Budget Office estimated that bids from the sales would total $2.2 billion. Instead, there was only about $14.4 million offered in high bids for 11 tracts as of Jan. 6. Ultimately, only $12 million was involved, as two of the tracts were dropped when the Bureau of Land Management transferred the leases the day before Biden was inaugurated.
No major oil companies participated in the lease sale. The main bidder was an Alaska state agency, the Alaska Industrial Development and Export Authority, which received seven of the nine bids ultimately transferred.
That is a strong signal that Arctic refuge oil development is uneconomic and unattractive even to industry, opponents have said.
The hopes for ANWR oil development to be an economic bonanza and a big source of government revenue are ill-founded, according to a recent economic report issued by the World Wildlife Fund.
The report used analysis by Rystad Energy, an international energy and business intelligence company. It evaluated all nine of the leases transferred after the Jan. 6 sale held by the Trump administration, none of which went to major oil companies.
The nine leases combined contain the potential for 1.64 million barrels of recoverable oil, the report said. That is a modest amount by Arctic Alaska standards; in contrast, the ConocoPhillips Willow prospect on the west side of the North Slope, which is currently under new review by federal regulators, holds an estimated 590 million barrels of recoverable oil, according to the company.
Any economic production of oil from the nine ANWR leases is not likely, the WWF report said.
“The results from modeling demonstrate that oil production from the Arctic Refuge is highly unlikely be economically viable. The failures of the first Arctic Refuge lease sale further suggest that that Congress’ assumption of the total economic benefits to the United States of two Arctic Refuge lease sales appear almost certainly to be orders of magnitude off the mark,” the report said.
To be economic, each lease needs sustained oil prices ranging from $62.50 to $83.60, prices that cannot be expected in the long term, the WWF report said. “Indeed, even if the current oil prices ($75 a barrel) were to stretch decades into the future only two of the leases could potentially be profitable. However, perhaps more realistically, and as set out above, this is an unlikely scenario,” it said.
An important factor likely to keep future oil prices low is the anticipated global switch to renewable energy to address climate change. Under a net-zero emissions scenario embraced by the International Energy Agency, the report noted, that share of fossil fuels as a percentage of global energy use would drop from 80 percent in 2020 to a little over 20 percent in 2050.